EdtechX Holdings Acquisition Corp. filed for a $55 million IPO today, with a focus on the education, training and education technology industries. EdtechX is being led by Charles McIntyre, as Chairman and Chief Investment Officer, and Benjamin Vedrenne-Cloquet, as CEO and Director. Both Mr. McIntyre and Mr. Vedrenne-Cloquet have significant experience in the EdTech space, having both co-founded EdTech Global, which focuses on education technology and training, and operates thought leadership events in Europe, Asia and Africa.

EdtechX has also included a $20 million forward purchase agreement of units from Azimut investors (at $10.00), plus, both the Crescent Funding Term and a new twist on the deadline extension.  Read below for more details:

Crescent Funding Term

Looking at this SPAC’s structure, we see the use of the “Cresent Funding Term” once again, that adjusts the warrant strike and redemption trigger in the event of the issuance of additional securities in connection with a business combination closing.  The term states:

“…. if

(x) we issue additional shares of Class A common stock or equity-linked securities for capital raising purposes in connection with the closing of our initial business combination at an issue price or effective issue price of less than $9.50 per share of Class A common stock (with such issue price or effective issue price to be determined in good faith by our board of directors),…

(y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of our initial business combination, and…

(z) the volume weighted average trading price of our Class A common stock during the 20 trading day period starting on the trading day prior to the day on which we consummate our initial business combination (such price, the “Market Value”) is below $9.50 per share,…

the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the Market Value, and the $16.50 per share redemption trigger price described above will be adjusted (to the nearest cent) to be equal to 240% of the Market Value.

As we’ve mentioned before, this is a strong statement that you’re going to perform the business combination the “right way” and it gives investors additional comfort and protection.  If you’ll notice though, the redemption trigger, (which is $16.50 before any extension), will not be adjusted 165%, instead it will be done at 240%.  This is an extra give on the part of EdtechX to sweeten the term.

Completion Deadline Extension

There is also a new twist on the completion deadline extension.  EdtechX has 18 months to complete their business combination.  However, EdtechX can receive an additional three months to complete if:

• EdtechX has a proxy on file relating to a proposed deal AND;
• The price of the common stock equals or exceeds the estimated per-share value of the amount in the trust on the 18-month anniversary of the consummation of the offering for any 20 trading days within the 30 trading day period ending 17 months post-IPO.

So, to put it in layman’s terms. If EdTechX has a deal and they have already filed a proxy relating to that deal, then we will need to look at the share price between the 16th and 17th month.  If the share price equals or exceeds the per-share trust value in any 20 of the the 30 trading days in that month, they get an extension.

For example:  Let’s say EdtechX announces in the 18th month and manages to get a proxy on file.  They would have to look back and check the share price in month 17 to see if it equaled or exceeded the per-share trust value.  In order to facilitate this, EdTechX is going to publish their per-share trust value on or prior to the 16th month anniversary.

It’s an interesting twist on extensions, but it’s difficult to see how this will play out.  Especially given that this is a 101.5% in trust deal, which means they are starting at IPO with $10.15 per share in trust.  With interest, this will go much higher by the time we get to month 16 and the trust value is published.  That’s going to be a high hurdle.

Seems like it’s better to be safe than sorry and aim on wrapping everything up by month 18.  Summary of terms below:

EdtechX Holdings Summary of Terms:

• Focus:  Education/EdTech
• Size: $55 million
• 101.5% held in trust ($10.15 per share)
• $10.00 unit comprised of one share of Common Stock + one full Warrant 
• Warrant call for redemption threshold: equals or exceeds $16.50 (cash or cashless exercise)
• 18 months to complete an acquisition + 3 months extension if:
  • A proxy for a proposed business combination has been filed AND;
  • The price of the common stock equals or exceeds the estimated per-share value of the amount in the trust on the 18-month anniversary of the consummation of the offering for any 20 trading days within the 30 trading day period ending 17 months post-IPO.
• Limitation on Redemption Rights: 20%
• At-risk Capital: $3.45 million (3,450,000 warrants at $1.00)
• Forward Purchase Agreement: 
  • Azimut Investors will purchase up to 2,000,000 units at $10.00 per unit (or up to $20,000,000)
• Underwriter fees: 2.5% + 3.5% deferred. 

Chardan and I-Bankers Securities are joint book-running managers.

Graubard Miller and Schiff Hardin LLP are Issuer’s Counsel and Underwriter’s Counsel, respectively.